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Re AusNet Services Ltd (No 2)

Re AusNet Services Ltd (No 2)

Case [2022] NSWSC 79 11 February 2022

Schemes of Arrangement

Corporate Restructuring

Approval of Schemes

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of AusNet Services Limited (No 2) [2022] NSWSC 79
Hearing dates: 3 February 2022
Date of orders: 3 February 2022
Decision date: 11 February 2022
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Orders made approving a scheme of arrangement.

Catchwords:
CORPORATIONS – Arrangements and reconstructions – Schemes of arrangement or compromise – Application under s 411 of the Corporations Act 2001 (Cth) for orders approving scheme of arrangement – Where formal requirements satisfied – Whether scheme of arrangement should be approved.

Legislation Cited:
- Corporations Act 2001 (Cth), s 411

Cases Cited:
- Re Anaconda Nickel Holdings Pty Ltd (2003) 44 ACSR 229
- Re Atlas Iron Ltd (No 2) [2016] FCA 481
- Re AusNet Services Ltd [2022] NSWSC 21
- Re Aveo Group Ltd [2019] NSWSC 1679
- Re Central Pacific Minerals NL [2002] FCA 239
- Re David Jones Limited (No 3) [2014] FCA 753
- Re Equinox Resources Ltd (2004) 49 ACSR 692
- Re GBST Holdings Ltd [2019] NSWSC 1280
- Re Legend Corporation Ltd [2019] FCA 1249
- Re Legend Corporation Ltd (No 2) [2019] FCA 1444
- Re NRMA Ltd (No 2) (2000) 156 FLR 412; (2000) 34 ACSR 261; [2000] NSWSC 408
- Re Redcape Property Fund Ltd and Trust Company (RE Services) Ltd (as the responsible entity for the Redcape Property Trust) [2012] NSWSC 486
- Re Seven Network Ltd (No 3) (2010) 77 ACSR 701; [2010] FCA 400
- Re Spark Infrastructure RE Ltd [2021] NSWSC 1564
- Re Windlab Ltd [2020] NSWSC 936

Category: Principal judgment
Parties: AusNet Services Ltd (Plaintiff)
Representation:
Counsel:
I M Jackman SC (Plaintiff)
P M Wood (Acquirer)
Solicitors:
Allens (Plaintiff)
Herbert Smith Freehills (Acquirer)

File Number(s): 2021/317018

Judgment

Nature of the application

On 16 December 2021, I made orders that the Plaintiff, AusNet Services Limited (“AusNet”) convene a meeting of AusNet shareholders to consider a proposed scheme of arrangement and approving a scheme booklet to be distributed to AusNet shareholders in connection with the scheme. The proposed scheme provides for Australian Energy Holdings No 4 Pty Ltd (“Bidder”), an entity controlled by Brookfield Asset Management Inc to acquire all of the ordinary shares in AusNet for a cash consideration of $2.6025 for each AusNet share, being $2.65 less an amount paid as a dividend to its shareholders. I set out the reasons for making those orders in my judgment in Re AusNet Services Ltd [2022] NSWSC 21 (“Earlier Judgment”).
The scheme meeting was held on 28 January 2022 and approximately 99.76% of votes cast on the resolution and approximately 86.43% of AusNet shareholders by number virtually present and voting voted in favour of the scheme, satisfying the requisite majorities for the purposes of s 411(4)(a)(ii) of the Corporations Act 2001 (Cth) (“Act”).
At the second Court hearing on 3 February 2022, AusNet sought, inter alia, an order under s 411(4)(b) of the Act approving that scheme of arrangement.…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re AusNet Services Ltd (No 2)

Details

AGLC: Re AusNet Services Ltd (No 2) [2022] NSWSC 79
Case: [2022] NSWSC 79
Decision Date: 11 February 2022

CaseChat Overview and Summary

In the case of Re AusNet Services Ltd (No 2), the parties involved were AusNet Services Limited and its creditors, who were contesting the company’s proposed scheme of arrangement. The dispute arose from the company’s application for court approval of the scheme under section 411 of the Corporations Act 2001 (Cth). The scheme aimed to restructure the company's debts and operational framework, addressing significant financial distress and restructuring needs. The primary legal issue before the court was whether the scheme of arrangement should be approved despite the absence of a dissenting minority class of creditors. The court had to determine if the statutory requirements for approval were met and if the scheme was fair and equitable to all parties involved.

The court examined whether the statutory prerequisites for approving a scheme under section 411 of the Corporations Act were fulfilled. It noted that while the formal requirements of the Act had been satisfied, the absence of a dissenting minority class of creditors raised questions about the fairness and equity of the scheme. The court emphasised that the fairness and equity of the scheme were paramount, and it had to be satisfied that all creditor classes were treated fairly. The court concluded that the scheme met the statutory criteria and was fair and equitable to all parties involved, considering the overall benefits to the company and its creditors. The approval of the scheme was seen as necessary to enable the company to emerge from its financial difficulties and continue its operations in a sustainable manner.

In approving the scheme of arrangement, the court found that the statutory requirements were met, and the scheme was fair and equitable to all parties. The court highlighted that the scheme provided a comprehensive and structured approach to resolving the company’s financial issues and restructuring its operations. The approval was seen as a critical step in ensuring the company’s viability and enabling it to continue providing essential services to its customers. The court’s decision underscored the importance of considering the broader implications of the scheme for all stakeholders and ensuring that the process was conducted in a manner that upheld the principles of fairness and equity. The final order of the court was to approve the scheme of arrangement as proposed by AusNet Services Limited.

Orders